To: NAM International Tendering Company

From: Bank of China

From: SWIRE0389731209334

Place: Dalian China

Date: 20021211

Our Bid Security No. LGSIO3OLIOO

For Bid No. NAM20X, For Package No. 4

Re: Guarantee Letter

Whereas Young’s Refractory Materials Address: Dalian, China (hereinafter called “the Bidder”) has submitted its bid dated Dec. 8, 2002 for Bid No. NAM20X for the supply of Package No.: Dead-Burned Magnesite (hereinafter called “the Bid”).

Known all people by these presents that we, Bank of China, Liaoning Branch having our registered office at No. 9, Yanan Road, Zhongshan District, Dalian, China (hereinafter called “the Bank”) are bound unto NAM International Tendering Company (hereinafter called “the Purchaser”) in the sum of USD 5,000,000.00 (say US Dollar Five Million only) for which payment well and truly to be made to the said Purchaser, the Bank binds itself, its successors and assigns by these presents.

The conditions of this obligations are:

1.if the Bidder withdraws its Bid during the period of bid validity specified by the Bidder on the bid form; or

2.if the Bidder does not assept the correction of errors pursuant to NAM Clause 24.2; or

3.if the Bidder, having been notified of the asseptance of its Bid by the Pruchaser during the period of bid validity;

a.fails or refuses to execute the contract form., if required or

b.fails or refuses to furnish the performance security, in accordance with the instructions to Bidders.

We undertake to pay to the Purchaser up to the above amount upon receipt of its first written demand, without the Purchaser having to substantiate its demand, provided that in its demand the Purchaser will note that the amount claimed ty it is due to it, owing to the occurrence of one or any of the three conditions, specifying the occurred condition or conditions.

This guarantee will remain in force up to and including thirty (30) days after the period of bid validity, but not later than February 30, 2003, after which date this guarantee will become null and void automatically whether the original is returned to us or not.

All claims made hereunder must be received by us on or before February 30,2003, after which date, our liabilities hereunder will cease and this guarantee will be of no further effect.

Yours Faithfully,

For Bank of China

Liaoning BranchAuthorized Signature__________